The U.S. dollar advanced against most of the Forex majors and retreated from a two-and-a-half-year low against the euro as the Labor Department reported that the number of new jobs created stood at 175,000, surpassing forecasts for a reading of 149,000 new payrolls. Although the percentage of joblessness went up slightly from 6.6 to 6.7 percent, economists explained that this was due to the fact that more individuals joined the labor force. The numbers seemed to put market traders at ease while indicating that the U.S. economy may not be faltering. Other announcements revealed that the Trade Deficit stayed at the same level in January, while there was an increase in U.S. exports as well as in imports. The Commerce Department revealed that the gap expanded by 0.3 percent in December. January’s data confirmed that imports and exports surged 0.6 percent, suggesting that higher demand for American goods around the globe resulted was due to improvement throughout a number of economies, including those of the emerging markets like China. Exports have risen to $192.5 billion and imports wet up to $231.6 billion, which was the most in three months. This was due to greater demand for equipment like telecommunications gear and heavy machinery. The pickup in imports denoted that U.S. businesses have also gained momentum. Gold Prices touched a one-week low following the news that U.S. employers added more jobs than predicted in February, thereby reducing pressure on the central bank from holding back on further stimulus tapering. Prior demand for harbor assets, which caused the precious metal to rally 11 percent, dissipated and with a hike in risk appetite, commodities like gold declined. Futures for April delivery slipped 1 percent and settled at $1,338.20 a troy ounce during afternoon hours on Friday in New York. Over the past week, Gold jumped 1.3 percent and on March 3rd Contracts reached $1,355.00 an ounce.
The euro advanced against the greenback and gained the most since October of 2011 early Friday as investors increased speculation that the european Central Bank may not engage in additional stimulus for now. The ECB announced that it won’t tighten monetary policy as the economy does not warrant such a move at this time. Mario Draghi, who heads the central bank, stated that recently published economic numbers signaled steady economic recovery for the region, and that low levels of inflation were not a major concern. Releases out on Friday indicated that the euro-zone’s financial institutions are slated to pay back their three-year emergency loans. The greenback erased losses against the Swiss Franc subsequent to the publication of Non-Farm Payrolls, but it has dropped slightly as Russia increased its presence in the Crimea region over the weekend. Today, Switzerland is scheduled to announce metrics on Retail Sales, a gauge the government utilizes to measure consumer spending, which is a major component of the Swiss economy. The British pound trimmed its advance against the greenback after it traded at a three-week high versus the U.S. currency. The Sterling was weighed down by a drop in expectations on Consumer Inflation.
The yen depreciated against the U.S. dollar on stellar Non-Farm Payroll releases out of the U.S. Japan will remain in the spotlight this week as the Bank of Japan’s policy makers are scheduled to meet for the second time in less than four weeks. The yen traded to the downside despite news that the key indicator on economic health sustained a dramatic rise.
Lastly, in the South Pacific, the Australian and New Zealand dollars both gained. The Reserve Bank of New Zealand is anticipated to consider boosting the benchmark interest rate when it meets on March 12th. The RBNZ suggested that higher interest rates may be needed in order to keep inflation above 2 percent. Recent data denoting that inflation went up while the Tasmanian economy expanded may support the call for tighter monetary policy. In Australia, the central bank left the key cash rate at 2.5 percent.
EUR/USD: ECB Sees No Need For Shift In Policy
The EUR/USD gained, although it dipped later on as the U.S. released better than forecast employment figures, suggesting that the U.S. economy was shaking off the winter blues and beginning to advance once again. In the euro region, President of the european Central Bank, Mario Draghi, indicated that an end to sterilization may present limited benefits, and intimated that the decision to leave stimulus at the current level was not a unanimous. Mr. Draghi suggested that much discussion went into the decision as not all policy makers see eye to eye. Analysts say that judging from Mr. Draghi’s comments, action by the ECB could be coming in the “not too distant future.” On the data front, The euro region showed that German Industrial Output climbed 0.8 percent in the first month of the year, which was more than expected; and December’s numbers were modified to show a hike of 0.1 percent in production, rather than the reported 0.6 percent drop. Lastly, a survey published on Friday suggested that improvements in employment may pickup throughout the E.U.
EUR/USD 4 Hour Chart" title="EUR/USD 4 Hour Chart" width="474" height="242">
GBP/USD: Sterling Climbed Last Week
The GBP/USD rallied over the course of last week, but dipped on Friday subsequent to solid Employment reports showing that the world’s largest economy is picking up momentum. On the data front, Halifax HPI announced the greatest advance in more than four years. Meanwhile, the Bank of England left the key cash rate at 0.5 percent and made no changes to its Asset Purchases. The GBP/USD retreated from a three-week high due to a drop in speculation over Consumer Inflation in the U.K.
GBP/USD" title="GBP/USD" align="bottom" border="0" height="242" width="474">
USD/JPY: Index Posts Impressive Numbers
The USD/JPY surged to a six-week high as Non-Farm Payroll reports released on Friday surprised the market showing a hike of 175,000 jobs. The pair rose as risk appetite returned to the foreign currency exchange, while Japanese Prime Minister Shinzo Abe continued to address companies in an effort to encourage a hike in wages. Mr. Abe has indicated that higher salaries could balance out any negative effects that may arise from the increase in sales tax. On the data front, a Japanese Index which reflects the strength of the economy went up by the most in six years while confirming that businesses experienced greater output ahead of the expected tax increase.
USD/JPY 4 Hour Chart" title="USD/JPY 4 Hour Chart" width="474" height="242">
AUD/USD: Aussie “Too High”
The AUD/USD dipped after the governor of the Reserve Bank of Australia suggested that judging by “historic standards,” the currency remains too high in value. The AUD/USD climbed to a twelve-week high in the morning hours on Friday subsequent to stellar domestic announcements showing a hike of 12 percent in Retail Sales for January, surpassing forecasts for a 0.5 percent advance. In other news, the South Pacific nation revealed that the Trade Surplus grew from AUD$0.59 billion to AUD$1.43 billion in the month of January, while economists had expected a drop. In previous days, the news confirmed that the country’s Gross Domestic Product went up 0.8 percent in the final three months of 2013.
AUD/USD 4 Hour Chart" title="AUD/USD 4 Hour Chart" width="474" height="242">
Daily Outlook: Today’s economic calendar is light. It shows that the euro region will report on the Sentix Investor Confidence, and will issue data on Spanish CPI, as well as on Italian and French Industrial Production. Australia will publish NAB Business Confidence. And Japan may post the Interest Rate Decision.